Business forum: For nonprofits, helping hands turn costly

The holiday season is upon us and individuals are gearing up to give back. Whether on their own or with their families, individuals are volunteering at their favorite nonprofits, including soup kitchens, youth programs and domestic-­violence shelters. Nonprofits rely heavily on volunteers during the holiday season and beyond. With dramatic declines in governmental, institutional and individual giving, nonprofits increasingly depend on volunteers to help with administrative tasks, organizational governance and core programs.

While volunteering brings rewards for the volunteer and the organization alike, it also poses risks. What happens if a volunteer who is setting up for a holiday event leaves a ladder in a doorway and causes an accident? Can the volunteer or the nonprofit be held liable? And what can be done to minimize the risks?

The federal Volunteer Protection Act (VPA) provides immunity for volunteers of nonprofit organizations and government agencies for economic losses incurred as a result of their actions, so long as:

• The volunteer was acting within the scope of his or her responsibilities at the time of the action or inaction.

• If appropriate or required, the volunteer was properly licensed, certified or authorized for the activities in question in the state in which the harm occurred.

• The volunteer did not act willfully, criminally, recklessly, with gross negligence, or in conscious and flagrant disregard for the rights or safety of the individual harmed.

• The volunteer did not cause the harm by operating a motor vehicle for which an operator's license and insurance are required by the state.

Even in those circumstances when a volunteer is subject to liability and required to pay for damages, the act generally permits only compensatory damages — those that compensate the individual for actual losses — not punitive damages. There is a narrow exception for situations in which there is clear and convincing evidence that the volunteer acted willfully, criminally or in conscious and flagrant disregard of the individual harmed. But such situations are rare.

Minnesota has adopted legislation that immunizes unpaid nonprofit directors, officers and volunteers from civil liability. Generally, these statutes grant immunity if:

• The individual who caused the harm was acting within the scope of his or her responsibilities and was acting in good faith.

• The individual's conduct was not willful or reckless.

But Minnesota does not grant immunity from lawsuits that are brought by the Minnesota attorney general or that are based on an express contract, a breach of pension plan fiduciary obligations, or federal law.

These laws largely offer immunity to the volunteer, but they do not immunize the organization. That means an individual who is harmed by the actions of the volunteer can assert claims against the organization. Thus, when it comes to volunteer liability, the best defense is a good offense. Here are some guidelines to help avoid accidents and manage costs when they do happen:

• Provide training to make sure that your volunteers know your organization's policies and procedures. Develop a volunteer handbook and distribute it to all volunteers. Have volunteers sign an acknowledgment that they have read and reviewed the handbook. Update the handbook as needed, inform volunteers of those changes and provide regular training.

• Set clear expectations for volunteers and supervise them to ensure that they are performing tasks properly and effectively. If there are certain tasks that you think certain volunteers should not perform, let them know.

• Obtain insurance or set aside funds to pay for claims. If you have insurance, make sure the policy covers acts or omissions by volunteers and ensure that you are providing the training and supervision to ensure that a claim will be covered. If you are self-insured, make sure that you have a plan for paying a damage award without draining the organization's financial resources.

About the author: Veena A. Iyer is an associate at Nilan Johnson Lewis practicing labor and employment law who provides assistance to nonprofit organizations. Her e-mail is viyer@nilanjohnson.com.